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Finance
Operating Margin
Operating profit divided by revenue, showing how much profit is made from core business activities before interest and tax.
Operating margin is one of the best ways to compare companies in the same industry. Higher and rising margins usually mean the business is getting more efficient or has stronger pricing power.
It's the percentage of every pound of sales that actually turns into profit from normal operations.
Real world: A software company with 35% operating margin keeps 35p of every £1 of revenue after paying staff and running costs. A supermarket with 3% operating margin keeps only 3p — very thin.
💡 Strong operating margin shows a business that turns sales into real profit efficiently.